Several days ago,the Bitcoin price fell 14% in only 30 minutes after a weird “flash crash” on the bitcoin exchange platform Bitfinx.
The Bitcoin price stayed around $250 before the fall,and it fell to $221 after the flash crash.But it was more shocking that happened on Bitfinex:the price of Bitfinex once fell to $171
Bitfinex is known as one of the largest bitcoin exchanges.It is said that the flash crash appeared after a huge sell order of 10000BTC (worth 2.3 million USD)
The company released a tweet at 03:22AM:
The seller orders and the margin trading positions are all legal,lenders will not be affected.
Bitfinex also provides margin trading except regular buy order and sell order,which means the users can borrow fund from the lenders on the platform,and the lenders take some interest.The users will speculate the trend of the price,then trade with short-term or long-term contract.
When the price changes suddenly likes this time,the users who have a long-term contract will see the net value of their accounts become zero. Bitfinex will clear these accounts in this situation and this will cause the price to fluctuate more violently.
Traditional exchanges have a 10% limit of price change about margin trading.But it is unclear that if Bitcoin will use this method.
Phil Potter from Bitfinex pointed out that the exchange has suffered technical failure many times.
The CEO of Crypto Facilities – Timo Schlaefer said that margin trading has caused Bitcoin to flash crash repeatedly in the past time.The flash crash happened on Bitfinex and BTC-e last August are the reason why the Bitcoin price fell over 10%.
He expressed that this is not good for Bitcoin ,as it shows the Bitcoin market is still
immature and unreliable. It seems Bitcoin has not improved in this respect.